Cash-strapped Cuba says export earnings way up

Cash-strapped Cuba says export earnings way up
Fri Dec 17, 2010 5:44pm GMT
* Good news for communist country and creditors
* No information on imports and balance of payments
By Marc Frank

HAVANA, Dec 17 (Reuters) – Cuba’s exports of goods and services rose nearly 42 percent this year, providing a much needed injection of cash for communist authorities who have been struggling to pay the country’s bills.

Higher prices for Cuba’s main exports nickel, petroleum derivatives and medical and other technical services likely accounted for most of the increase, while revenues from tourism and communications were also reportedly up.

Economy Minister Marino Murillo, in his year-end report to the National Assembly, only parts of which were made available to the public, said exports increased by 41.5 percent, but no further information on this year’s trade and balance of payments was provided.

Murillo referred to the export of both goods and services, which amounted to $12 billion in 2009. Although he did not give a dollar figure, a 41.5 percent increase would mean this year’s exports garnered a record $17 billion, or a gain of around $5 billion.

Some 75 percent of Cuban exports come from services such as tourism, communications and the export of doctors and other professionals to oil-rich countries such as Venezuela, Angola, Algeria and Qatar, which pay for the services on a sliding scale linked to oil prices.

Prices for oil increased significantly in 2010, as they did for Cuban exports nickel and sugar.

There was no information made public on imports, which the government reported were $10 billion in 2009, nor the balance of payments, which registers the overall inflow and outflow of cash in a country.

Foreign Trade Minister Rodrigo Malmierca said in November imports had increased by just 1 percent through September.

“Even if imports somehow came in at 20 percent above last year’s figure, that would still mean there was a trade surplus of $5 billion to $6 billion, compared with $2 billion in 2009,” a foreign businessman said, asking his name not be used.

He estimated the balance of payments registered a surplus of around a billion dollars.

BILLS GO UNPAID

The positive numbers are good news for Cuba, but only a first step toward getting its debt-ridden economy out of the woods.

The country has been struggling with a severe financial crisis since 2008, when hurricanes, the international financial crisis and internal inefficiencies left it without funds to pay its bills.

Many debts to governments and business were restructured or went unpaid, foreign company bank accounts frozen, dividends owed joint venture partners postponed and imports cut a staggering 37 percent in 2009.

Western diplomats and businessmen said Cuba was gradually unblocking the funds, but at the same time still dragging its feet on foreign debt payments and dividends owed its foreign partners operating in the country.

Cuba is under a strict U.S. trade embargo and excluded from most international lending organizations that could help in a pinch, while many creditors have tired of its repeated rescheduling of debt.

Cuba last reported its foreign debt at $17.8 billion in 2007. Most analysts agree it is now above $21 billion — or close to 50 percent of the gross domestic product and some 25 percent more than annual export revenues.

Cuban PresidentRaul Castro has pounded away at the need for Cuba to get its economic house in order and pay its bills since taking over from his brother Fidel Castro in 2008.

The country’s growing debt and service payments are a key reason for Castro’s push to overhaul Cuba’s Soviet-style economy, according to government insiders.

The reforms, to be discussed at a Communist Party congress in April, include drastic budget cuts and layoffs and ending most state subsidies.

They would also grant state-run companies more autonomy and encourage more small private businesses, foreign investment, cooperatives and other “non-state” forms of running enterprises. (Editing by Jeff Franks and Eric Beech)

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